Finance Marketing Business

A common dilemma for business owners worldwide is knowing when to stop chasing overdue accounts in-house and hand them over to a debt collection agency.

In reality you’re torn between trying to save money and customers chasing account yourself whilst being mindful not to hold on to those accounts for so long that they become virtually impossible to recover.

Hence, there comes a point when pursuing a debt in-house costs you more than referring that debt to a debt collection agency.

The age-old question then is, “How Do I Know When To Refer A Debt To A Debt Collector?”

Now while it would be nice to give you an exact length of time the reality is this depends on both your business as well as the individual debtor.

Consequently, the most reliable way to work out the optimal referral time is with the aid of a proven and flexible formula. To be effective this formula must perform two crucial tasks at the same time.

Firstly, in order to accelerate your cash-flows, this formula has to sensitively yet assertively facilitate prompt payment without upsetting your good customers.

Secondly, and just as importantly, this system must accurately identify crooks early so that you can refer these debts while they’re still young. And as debts become more difficult to recover the older they become, by referring early you’ll massively increase your chances of full and speedy recovery.

With that in mind, let’s take a closer look at this system.

In essence it comprises of a simple yet powerful three-step formula.

Step 1. A Friendly Reminder: As soon as an account passes its due date without being paid you must send them a strategically crafted Collection Reminder Letter.

Step 2. A Polite Word In Their Ear: If after a week of receiving your Debt Reminder Letter your debtor has neither settled their account nor set-up a repayment schedule then you must get on the phone and discuss settlement of the account.

Step 3. A Respectful Yet Assertive Demand: If they continue to ignore your requests for payment or alternatively they fail to honor their repayment plan then that’s your unequivocal trigger to send them a Final Demand Letter.

If the account remains unpaid despite your Final Demand Letter then that’s proof-positive you’re now dealing with a serious debt risk. It’s at this precise moment that you know it’s time to give up chasing that debt on your own and instead hand the debt over to a Professional Debt Collection Agency without delay.

Now if you’re like most business owners you probably send out a number of Reminder Letters over a period of several months. If that’s the case you’ll probably feel somewhat reluctant to switch to such a rapid-fire formula.

However, the truth is these three communications are all any good customer needs to settle their account. Every one else poses a clear and serious risk to your business.

And if they’re having trouble paying you then it’s a safe bet they’ve got a swag of other creditors they aren’t paying as well.

Compounding matters, chances are these other businesses won’t have procedures in place to quickly identify and appropriately handle delinquent debtors. So while they’re oblivious to the dangers, you’re busy jumping the queue to recover your money.

And just like the squeaky gets the grease, being the first to apply serious heat on your debtor means they’ll pay you before they pay anyone else.

But more importantly, because you’re first in line to get paid, the chances they’ll have the means to settle your debt are infinitely greater than if you were the last in line… when what little funds they may have had have all been spent paying everyone else.

Bottom Line: Following this formula to the letter will skyrocket both the number of recovered accounts as well as the speed with which you recover them. It all boils down to the irrefutable truth of bad debts… “The faster you recover your debts the more money you’ll pocket!

This article will give you a quick rundown of the different factors used to determine whether you will be approved or denied for a line of credit. This can allow you to build a plan of attack to present your best possible financial case when applying for a line of credit.

With underwriting, there are three main factors which come into play. The first factor is your debt to income ratio. With this, the underwriters will look at all of your debts on your credit report and what the minimum monthly payments are. This is listed on the credit report for every credit account you currently have which is open.

Although your housing expenses may not be part of your credit report, they are still of great interest to the underwriters. Although there is no set rule as to a good debt to income ratio, it is commonly recognized that it shouldn’t surpass forty percent of your earnings.

It is also important to be have a good credit score. If your score surpasses 700, most would deem that to be a respectable score.

Factors which go into your credit score include whether your outstanding balances on your credit cards exceed 50% of the credit limit and other information such as collections, bankruptcy, and judgments which can appear against you

The length of time you have inhabited your current home and worked at your current employment are important factors as well as they help to establish stability.

Although not as important as your credit history or capacity to pay back, stability is still very important. You are more like to receive a line of credit as your credit risk is thus decreased.

These three factors explain the bulk of the decision making process for a line of credit.

Credit card debt is a difficult problem to solve. Sky high interest rates and fees for late payments make eliminating such debt very difficult. That is where counseling companies come in handy. They provide a comprehensive plan to control such debt that is so easy to fall into.

Paying your credit card bills on a weekly, not monthly, basis is an excellent way to control your credit card debt. Not only will this save you a lot of money on interest, which accrues on an hourly basis, but it will also be much easier mentally to pay your bills. It seems much less daunting to pay what you owe weekly instead of monthly as the sum of money will be much less.

Another aid that is there to help out credit card holders is the Consumer Counseling Center of America. This is an organization that donates its time and access to credit counseling in order to help people who are in severe economic straits. They can be of help in several different ways. They can aid you in drawing up a good plan of action to reduce your debt. Some are even able to contact some of your creditors and work to lower your interest rate and the amount of your payments.

The previously mentioned counseling center, know simply as the CCCA, can also help you in other ways, such as helping you to get all of your payments up to date, keeping creditors away, helping you keep up with your payments and getting rid of any long outstanding debts.

In order to gain maximum benefit from institutions such as the CCCA, it is vital to exercise financial discipline. Those who have piled up huge credit card debts must curb their shopping impulses. No debt counseling can succeed unless an individual cuts credit card purchases. The individual can do so by canceling all credit cards but one for use in emergencies. This credit card should have a low credit limit and low interest rate, and should be used only in emergencies.

It is always a good idea, when possible, to move all of your credit card debt to one company, preferably the one with the lowest interest rate. Be on the lookout for offers of 0% interest balance transfers. They will help you to reduce interest costs.

If a company promises to get rid of all of your debt for a very small charge, be aware. Many people have been ripped off by such people who claim that they can help you solve your credit problems. Do a careful investigation of any debt counselor before using their services.

You alone are in the best position to eliminate or at least lessen your credit card bills. It is a must to develop a comprehensive budget and avoid unplanned spending. You will thus be able to live a tranquil life free of the worries that plague those who are buried in credit card debt.